Personal bankruptcy rates have been increasing every year since 2005, when bankruptcy reform changed the requirements for filing, particularly for Chapter 7 bankruptcy. Florida's rate of bankruptcy filings is one of the highest in the country. Nationwide, personal bankruptcy filings were up nine percent over 2009.

According to the American Bankruptcy Institute, 1.53 million personal bankruptcies were filed in the United States in 2010. In 2009 there were 1.41 million.

There are many reasons people file for bankruptcy protection, but the inescapable reason for the continued increase in personal bankruptcies is the combination of the poor job market and the poor housing market. Fort Lauderdale bankruptcy attorneys know that this is especially true in Florida, where the housing market is in even worse shape than in most parts of the country.

Overspending still plays a part in some bankruptcies, and divorce or unexpected medical bills drive many families into bankruptcy also. But these days extended unemployment is a common factor that drives people to seek protection from a bankruptcy court.

Unemployment leads many families to drain their savings when unemployment benefits do not cover expenses. When the money is gone, many borrow more. Until the current recession hit, families that were desperate for money could sell their homes. That way they could eliminate their biggest expense, the mortgage payment, at the same time they saw a profit on the sale and turned their home equity into cash. None of that works now. Even selling a home will not usually bring a profit, will not usually eliminate mortgage debt, and equity may have already been drained.

Credit card use is down across the country, which would normally mean that bankruptcy rates would be expected to drop in the coming year. Without recovery in the job and/or housing markets, though, bankruptcy numbers are likely to keep rising in 2011.

Source: Star Tribune "Bankruptcies up again in 2010 for Minnesotans" 1/31/2011